Stocks Rise as Treasuries Fall on U.S. Data, China
Stocks (SPX) rallied, sending the Standard & Poor’s 500 Index to the biggest gain in seven weeks, oil rose and Treasuries fell after data on U.S. employment and manufacturing beat estimates.
The S&P 500 jumped 1.1 percent to 1,427.59 at 4 p.m. in New York for the biggest increase since Sept. 13. The Stoxx Europe 600 Index added 1.3 percent. Copper and oil advanced 1 percent. Ten-year Treasury yields gained three basis points to 1.72 percent. The yen weakened against all of its 16 major peers.
Fewer Americans than forecast filed for jobless claims last week, companies expanded payrolls in October by the most in eight months, and the Institute for Supply Management’s U.S. factory index rose to 51.7 in October from 51.5 a month earlier, reports showed today. A Chinese purchasing manager’s index climbed to 50.2 in October, a sign economic growth is picking up after a seven-quarter slowdown.
Today’s data “definitely fits into the trend of some bit of firming in the fourth quarter so far and that’s the good news,” E. William Stone, chief investment strategist at PNC Wealth Management in Philadelphia, said in a phone interview. His firm manages about $112 billion. “There is more upside in a sense that I don’t think valuations are stretched. We don’t think we’re going into a recession so we don’t expect earnings are going to collapse.”
The U.S. jobless rate probably increased to 7.9 percent in October from 7.8 percent in September, a Bloomberg survey of economists showed before a Labor Department report tomorrow. It will be the last of the monthly employment reports before Barack Obama and Mitt Romney face off in the Nov. 6 presidential election.
The Labor Department reported jobless claims fell last week, with applications for benefits dropping by 9,000 to 363,000, the fewest in three weeks. Economists forecast 370,000 claims, according to the median of 49 estimates in a Bloomberg survey.
U.S companies added 158,000 workers in October, higher than forecast, data from ADP Research Institute showed today. This is the first ADP report was derived using a larger sample and new methodology.
Economists in a Bloomberg survey projected a factory index reading of 51 for October, according to the median of 88 forecasts. The dividing line between expansion and contraction is 50 and economists’ estimates ranged from 49.2 to 52.5.
Visa Inc. (V) rose 3.7 percent after reporting fourth-quarter profit that beat analysts’ estimates. Macy’s Inc. climbed 6.4 percent after raising its sales forecast. Pfizer Inc. (PFE) retreated 1.3 percent as the world’s largest drugmaker narrowed its forecast for 2012.
Better-than-estimated results from British Sky Broadcasting Group Plc and Lloyds Banking Group Plc supported European stocks. Six shares advanced for every one that declined in the Stoxx 600.
Oil extended gains after the U.S. Energy Department said supplies declined last week, falling 2.05 million barrels to 373.1 million. Crude in New York increased to $87.09 a barrel.
Copper rose for a third day in New York after Chinese manufacturing returned to growth, supporting the demand outlook in the world’s leading consumer of the metal.
The yen depreciated 0.5 percent to 80.18 per dollar. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, climbed 0.2 percent to 80.06.
Treasuries fell, snapping a three-day gain. U.S. government debt declined for a third month in October, the longest slide since the last quarter of 2010, according to Bank of America Merrill Lynch indexes.
Treasury trading volume rebounded yesterday. ICAP Plc, the largest inter-dealer broker of U.S. government debt, said trading totaled $250 after falling to a 10-month low of $82 billion on Oct. 29. The yearly average is $241.8 billion a day in 2012.
The MSCI Emerging Markets Index (MXEF) advanced 0.5 percent. The Shanghai Composite Index (SHCOMP) added 1.7 percent, the most since Oct. 9. Brazil’s Bovespa gained 1.2 percent. South Korea’s Kospi index (KOSPI) fell 0.7 percent.
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